Passage of healthcare reform in Washington is sparking concern in some state capitals that Medicaid costs will quickly escalate, exacerbating the already unprecedented levels of deficits among state budgets.

Thirteen states, with Florida taking the lead, filed suit in federal district court in Pensacola, Florida. The 13 states include South Carolina, Nebraska, Texas, Michigan, Utah, Alabama, South Dakota, Idaho, Washington, Colorado, and Louisiana. Virginia has filed a separate law suit in Richmond, Virginia. The lawsuit filed by the 13 states challenges the health care bill on two grounds: the mandate that citizens have insurance and that the bill is an unfunded mandate.

The Medicaid Program was established in 1965 as part of the Social Security Act and provides medical benefits to groups of low-income people. Medicaid is managed by the states within federal guidelines. Federal Center for Medicare and Medicaid Services ("CMS") monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards. Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States. In 2008, it covered nearly 63 million individuals. Under the Health Care Bill, Medicaid will be expanded to cover all individuals whose income is 133 percent of the Federal poverty level.

Medicaid does not provide health care directly. Instead, it pays hospitals, physicians, nursing homes, managed care plans, and other health-care providers for covered services that they deliver to eligible patients. Required services that the federal government mandates must be provided by Medicaid include:

• Inpatient hospital services
• Outpatient hospital services
• Prenatal care
• Vaccines for children
• Physician services
• Nursing facility services for persons aged 21 or older
• Family planning services and supplies
• Rural health clinic services
• Home health care for persons eligible for skilled-nursing services
• Laboratory and x-ray services
• Pediatric and family nurse practitioner services
• Nurse-midwife services

Medicaid is jointly funded by state and federal government. States provide up to half of the funding for the Medicaid program. In some states, counties also contribute funds.

The federal government contributes at least $1 in matching funds for every $1 a state spends on its Medicaid program. The fixed percentage the federal government pays, known as the Federal Medical Assistance Percentages ("FMAP"), varies from state to state, with poorer states receiving larger federal amounts for each dollar they spend than wealthier states. The national average is about 57 percent.

Of most concern to states is the cost of health care reform on the state's budget. In most states, Medicaid is among the top 3 budget items the states funds. On average, states spend approximately 22 percent of their budgets on Medicaid. That is why most states are so concerned about the impact of federal health care reform on state budgets and why some are going to court.

The states' suit claims that the new health care law mandate that states pay increases to Medicaid recipients, without providing resources to pay for it, is unconstitutional. The suit filed in Florida claims that "the Act converts what had been a voluntary federal-state partnership into a compulsory top-down federal program in which the discretion of the . . . states is removed, in derogation of the core constitutional principle of federalism upon which this Nation was founded."

The states' suit also maintains that the Constitution does not give Congress the power to mandate that citizens have health-care coverage. "The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage," the lawsuit reads. The states allege that the act violates the 10th Amendment and Article I of the U.S. Constitution.

The Constitution gives Congress the authority to regulate commerce in the "commerce clause" in Article I. The suit argues that Congress is expanding its right to regulate commerce beyond what the Constitution envisioned. Those opposed to the bill maintain that the "commerce clause" does not give the government power to require an individual to engage in economic activity or require that a person purchase anything, let alone health insurance, nor does it give the government the right to penalize those who do not. The suit states that the fine levied against uninsured individuals is a tax.

"Just being alive is not interstate commerce," said Virginia Attorney General Ken Cuccinelli in a statement before the Virginia lawsuit was officially filed. Virginia's General Assembly passed a law earlier this year stating that no resident can be compelled to have health insurance.

 

Filed Under : Health Care